Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
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8:30 AM EST Thursday, July 6, 2006: By
popular request, I present a summary of an investment talk I gave recently in
Sydney:
+ Fortunes - the perfect investment -- are made in what you understand, control
and love. Step outside and you're toast.
+ You can't predict what you do control. But, if you are in control,
you can avoid doing stupid things. You can sell more when times are tough. You
can cut expenses, etc.
+ You can't predict what you don't control. Prediction is basically impossible.
Accept it. Wall Street's predictors (they're called economists) are not predictors.
They're salespeople. They predict happiness so Wall Street can sell its product.
+ Hence, with no ability to predict, you need a broad allocation of investments.
One investment goes bad; one goes good. Overall you do OK.
+ "Allocation" is not what brokers, financial advisers or your friends
recommend for you. They can only "sell" or tell you what they can
sell or know. Which is always too narrow. In fact, the irony is that the only
place prediction works is is predicting what the brokers will sell you
-- big cap stocks whose growth days have long since ebbed.
+ Enter, Harry's Theory of Bird Doggers. You must find people with knowledge
in specific, tiny areas who can help you and who will invest alongside you with
large amounts of their own money. This gives them an incentive to be honest,
to have an eye to the long-term viability of what they're recommending.
+ You cannot create an arbitrary allocation -- e.g. 35% equities, 20% bonds,
35% real estate, 10% cash -- and stick with it through thick and thin. "Allocation"
-- what you own -- is a function of what you find, are comfortable with and
have time to mess with. Portfolio
allocation is an on-going day-by-day process.
+ Due diligence is an ongoing process.
You need to have a system. Some simple ideas:
-
Do not blindly accept recommendations from your rich friends.
- What's management's history?
- What your money going for or to?
- Push them in some way. Make a ridiculous request. Raise questions of technical
competence. Ask for a simple request. Whatever you can think of. Gauge their
response. Often it's immature -- they're hurt, they get annoyed. You're looking
for a money manager/ an entrepreneur who can take weird stuff in stride, with
a sense of humor. After all, that's what life is all about.
+ Always follow
our inviolate 15% Stop Loss. Apply it to stocks and managers. Don't fall
in love with stocks, money managers or brokers. Stick with wives.
+ Finally learn to sayNo. Saying No is hard. Follow our mantra: When
in doubt, stay out. And always remember: When God closes a door, He opens
a window. Which means a better opportunity always comes along.
Commodities
Fund results: My commodities fund was up 6.94% after fees
for the first six months of 2006. I had promised that I'd email readers who
wanted the fund's name and contact information. But by the time, the first emails
arrived and I had time to answer them, the fund had plunged and was losing money.
(Welcome to the commodities business, Harry.) Now, I feel more comfortable.
If you want contact information, send me an email.

How
to fix things, including computers, phones and your broadband service. The
standard solution is to unplug the offending item, count to thirty and plug
it back in. That's for standalone things, like phone systems. If the thing is
part of a network -- e.g. you're having trouble with your broadband service
-- you need to unplug everything. Count to thirty. Then plug them back in --
but in the following order:
First,
the DSL or cable modem. Wait until the lights are on and are steady. This means
they've synchronized with the network at the cable or telephone company.
Second, your wireless or wired router. You can recognize it. It's the
blue gadget. It's usually made by Linksys. Make sure all its lights are steady.
This means it's now synchronized with your DSL or cable modem.
Third, your computer. Plug it in. Turn it on. It should now be on the
Internet.
If you forget
all this, remember to turn everything on, starting with the item closest
to your telephone or cable wall jack.
Greenborder
sounds like a great idea: The Wall Street Journal's
Walt Mossberg has a piece today on an intriguing piece of software called Greenborder.
Walt writes:
Greenborder
has developed a product that isolates the browser from the rest of the computer,
without impairing your Web browsing. It erects a sort of fence around the
browser. Inside that fence, the browser runs normally, along with associated
programs like media players. But the browser can't be used to install bad
software or to spy on the rest of the computer outside the fence.
With this product,
called GreenBorder Pro, any malicious software you pick up is trapped in a
computing environment -- called a virtual session -- that exists only inside
the fence and can't affect any key files or settings outside.
Once you quit
the browser, this virtual session simply disappears, along with any bad stuff
that has collected within it. Your files and settings remain unaffected. You
can even purge the bad stuff from the virtual environment at any time by clicking
on a command called Clean and Reset GreenBorder.
For instance,
inside a GreenBorder Pro session, you might get infected with a "browser
hijacker," a spyware program that permanently changes your browser's
home page and search page to sites operated by sleazy companies. But once
you quit the browser, or click on Clean and Reset, the hijacking effects disappear.
Mossberg doesn't
know if the software works, though he suspects it does. Last night I installed
it on one of my PCs. It seemed to work. It certainly didn't mess anything up.
It may be worth using. For Mossberg's article, Click
here. To download the software, click
here. The first 10,000 downloads are free.
Are
Susan and I the only two people hooked on 24?
The show defies all logic, yet is totally engrossing,
to the detriment of work, sleep, meals and a life. Start with Season 1, Disc
1. Work yourself through the series. We use Netflix, but your corner video store
works just fine.

Honesty
at Amtrak: I'm booking a train for an early ride back to the City
this morning. Under amenities, Amtrak notes that my train has "none."
Comforting.
Ken
Lay died. He was 64. So am I.
Mark Palmer, Enron's former spokesman, who
said he had not spoken to Mr. Lay since 2002, told the New York Times, "Ken
was a spiritual guy and he believed the Lord has a plan for him. If this is
it, I hope he's at peace."

Lay in Washington and not enjoying his visit. I pray the Lord has a better
plan for me.
Wimbledon
Tennis is on. The finals are this weekend.
2006
Wimbledon TV schedule
|
July
6
|
7-8
a.m. (live)
|
Highlight
show |
ESPN2
|
July
6
|
8
a.m.-noon
|
Women's
semifinals |
ESPN2
|
July
6
|
Noon-5
p.m.
|
Women's
semifinals |
NBC
|
July
6
|
8-10
p.m.
|
Highlight
show |
ESPN2
|
July
6
|
11:35-11:50
p.m.
|
Highlight
show |
NBC
|
July
7
|
3-5
a.m.
|
Highlight
show |
ESPN2
|
July
7
|
7-8
a.m. (live)
|
Preview
show |
ESPN2
|
July
7
|
8
a.m.-noon (live)
|
Men's
semifinals |
ESPN2
|
July
7
|
Noon-5
p.m.
|
Men's
semifinals |
NBC
|
July
7
|
8-10
p.m.
|
Highlight
show |
ESPN2
|
July
7
|
11:35
p.m.-12:05 a.m.
|
Highlight
show |
NBC
|
July
8
|
3-5
a.m.
|
Highlight
show |
ESPN2
|
July
8
|
9
a.m.-2 p.m. (live)
|
Women's
final |
NBC
|
July
8
|
2-3
p.m.
|
SportsCenter
women's final (postmatch) |
ESPN2
|
July
9
|
9
a.m.-3 p.m. (live)
|
Men's
final |
NBC
|
July
9
|
3-4
PM
|
SportsCenter
men's final (postmatch) |
ESPN2
|
Now, who's dumb?
A young boy enters the barber shop and Bill the barber whispers to his customer,
"This is the dumbest kid in the world. Watch while I prove it to you."
The barber puts
a dollar bill in one hand and two quarters in the other, then calls the boy
over and asks, "Which do you want, son?"
The boy takes
the quarters and leaves.
"What did
I tell you?" said the barber. "That kid never learns!"
Later, when the
customer leaves, he sees the same young boy coming out of the ice cream store.
"Hey, son!
May I ask you a question? Why did you take the quarters instead of the dollar
bill?"
The boy licked
his cone and replied, "Because the day I take the dollar, the game's over"

Harry
Newton
This column is about my personal search for the perfect
investment. I don't give investment advice. For that you have to be registered
with regulatory authorities, which I am not. I am a reporter and an investor.
I make my daily column -- Monday through Friday -- freely available for three
reasons: Writing is good for sorting things out in my brain. Second, the column
is research for a book I'm writing called "In Search of the Perfect
Investment." Third, I encourage my readers to send me their ideas,
concerns and experiences. That way we can all learn together. My email address
is . You can't
click on my email address. You have to re-type it . This protects me from software
scanning the Internet for email addresses to spam. I have no role in choosing
the Google ads. Thus I cannot endorse any, though some look mighty interesting.
If you click on a link, Google may send me money. Please note I'm not suggesting
you do. That money, if there is any, may help pay Claire's law school tuition.
Read more about Google AdSense, click
here and here.
Go back.
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